Categories: Uncategorized

IAG secures Spanish bank loans for Iberia and Vueling despite BA job cuts


International Airlines Group (IAG) this morning announced it had secured over €1bn (£880m) in Spanish bank loans for its Iberia and Vueling carriers, a day after announcing 12,000 job cuts at British Airways (BA).

The loans, which will be guaranteed by the Spanish state bank, will see Iberia receive $750m and Vueling $260m to see them through the coronavirus crisis.

Read more: British Airways to axe a quarter of pilots amid 12,000 job cuts

Finance chief Stephen Gunning said the money would be channelled through a group of five banks and backed by the state.

“The agreement is part of the legal framework established by the Spanish government to mitigate the COVID-19 economic impact”, he added.

In March British Airways extended one of its credit lines to $1.4bn to help it through the crisis.

IAG chief executive Willie Walsh is a well-known opposition of state aid, and has repeatedly said it will not pursue such schemes through the crisis.

In March Walsh confirmed that the group had not followed other airlines in seeking financial help from governments.

Earlier in the year IAG had filed a complaint with the European Union about a potential UK bailout of regional carrier Flybe.

Yesterday British Airways announced that up to 12,000 jobs, including a quarter of its pilot roles, would be cut due to the crisis.

It was also reported that the airline might not return to flying from Gatwick even after the crisis abates.

Listen to our daily City View podcast as we chart the economic fallout and business impact of the coronavirus pandemic.

Pilots’ union Balpa said that it was “hard to see the justification” for the cuts, given that IAG had declined government support:

“There are many options to ensure BA can continue its business and survive coronavirus and BALPA does not accept that job losses are the only answer. Pilots want evidence that all options have been explored fully”.

Other carriers such as Easyjet have taken advantage of government support to bolster its finances, drawing down £600m from the Bank of England’s loan scheme.

Ryanair this morning warned that state aid could “significantly distort” competition in the aviation sector when demand returns.

Read more: British Airways owner IAG sees shares plummet after job cuts announcement

Due to such funding, the budget carrier pointed out, flag carriers bolstered by state funds will be able to undercut other airlines on pricing and drive down their market share.

An IAG spokesperson said: “These are commercial loans agreed with banks in accordance with current market conditions with 70 per cent government guarantee”.

Published by
Edward Thicknesse